If Congress fails to act before the end of the year, taxes will rise sharply for every American taxpayer. Also, as a consequence of the debt ceiling compromise reached in 2011, modest spending cuts are slated to take effect. Yet, Washington conventional wisdom has it exactly backwards; the modest spending cuts are seen as a disaster, and tax hikes as a cure-all for our fiscal problems. The debate is now more about whose taxes should be raised by how much and less about any spending cuts at all.
This is the behavior of addicts, and spendaholism is rampant in both parties. When the economy is booming the federal coffers fill up and Congress—no matter which party is in control—finds ways to spend it.
When the economy weakens, we’re told stimulus is needed and spending spikes even higher. Now spending has reached such frightening levels that persistent trillion dollars deficits are placing a political and practical limit on spending. Instead of bringing spending down, the spendaholics conclude they must raise taxes to bring in more money to spend.
The president’s proposed tax hikes on the rich are too small to make any dent in the deficit. Mark Steyn ran the numbers: Obama's Buffett Rule would raise $3.2 billion per year, which is less than the federal government borrows in a single day. It would therefore take the Buffet Rule 514 years to pay off the 2011 deficit alone.
Of course, the money won’t actually go towards deficit reduction. It will go to increased spending. In fact, historical analysis by Professor Richard Vedder of Ohio University found that for every $1 Congress raises taxes, it increases spending by $1.17. That means not only will the entirety of a tax hike go to increased spending, but that Congress will spend even more on top of that, worsening deficits.
For decades public pressure has established the Republican Party as the party that won’t raise your taxes. So much so that most elected Republicans have put their commitment to oppose tax hikes in writing by signing the Taxpayer Protection Pledge. The pledge states, in no uncertain terms, a commitment to their constituents to “oppose any and all efforts to increase the marginal income tax rates” and to “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”
Now, after campaigning on that promise, some Republicans -- no doubt in the grip of spendaholism – are pretending that raising taxes is a great act of political courage.
It isn’t. It’s an act of cowardice.
Raising taxes is what politicians do when they are unwilling to do the hard work of setting priorities and saying no to the politically powerful Washington special interests demanding more spending.
While the media breathlessly reports every wayward Republican considering a tax increase, there has been not one proposal for spending restraint from Democrats, and President Obama has advocated significant spending increases in his usual pet areas of renewable energy, union training programs, and the like.
So we face a real risk of a bipartisan agreement to fleece the American people with higher taxes – perhaps on the rich first, but eventually on the middle class because that’s where the money is.The only way to stop it is to demand that tax hikes be taken off the table completely, that those who made a promise to oppose tax hikes make good on it, and to force Congress to finally deal with its spending problem. I’ve set up a petition at www.HouseStandStrong.com urging House Republicans to do just that.